The Vampire Blade is found in Gold Dungeons. It heals you every time you attack a mob.
As of the 5.3 Update, the Vampire Blade was improvised, decreasing the damage dealt and increasing the health restored. However, this did not apply to existing Vampire Blades, only ones that are newly obtained, dividing them into "new" and "old" new Vampire Blades.
Old Vampire Blades
Old Vampire Blades, or any obtained prior to the 5.3 update, deal 10 hitpoints (5 hearts) of damage and heal 1 hitpoint (half a heart) every attack.
New Vampire Blades
New Vampire Blades, or any obtained after to the 5.3 update, deal 7 hitpoints of damage and heal 4 hitpoints (2 heartst) every attack.
Both new and old Vampire blades are repaired with Diamonds or combining them in an anvil. When combined, the properties of the Vampire Blade being repaired are retained, as opposed to the repair material.